Why Aren’t Those Accused of Money Laundering Charged Like Murder Suspects?

Aziz Rahman, of Rahman Ravelli, argues that those waging the war against money laundering are missing the real targets.

So the European Commission wants to give the European Banking Authority (EBA) powers to ensure money laundering is investigated more consistently.

This could mean the EBA being able to ask national anti-money laundering supervisors to investigate suspected laundering and take specific action. There are also plans for national anti-money laundering supervisory authorities, improved information sharing and enhanced cooperation with non-EU countries on cross-border cases.

Could this bring results? Possibly. But it ignores the huge money laundering elephant that is set slap bang in the EU’s room. The elephant that will tell anyone who will listen that if each and every bank and enforcement agency was genuinely concerned about money laundering we wouldn’t have the need for constant EU handwringing and proposals. But they appear not to be. So we have an endless procession of procedures and tough talk. And all the while the examples of unchecked money laundering on a vast scale keep coming to light.

September saw Thomas Borgen resign as CEO of Danske Bank, as the bank finally admitted that most of the €200 billion (£178 billion) that had passed through its Estonian branch between 2007 and 2015 was laundered money being moved illegally out of Russia, the UK and the British Virgin Islands. Weeks earlier, the Dutch bank ING paid €775M to settle an investigation that it had failed to detect money laundering. Last year saw Germany’s Deutsche Bank fined almost $700M for helping wealthy Russians move $10 billion out of the country and recent months have been punctuated by high-profile money laundering cases at banks in Malta, Latvia and Spain.

In any other situation where criminal activity was known to be being conducted repeatedly on a large scale, the authorities would swoop. And they wouldn’t just make some enquiries and then hand out a large fine to an organisation. They would follow the chain of evidence, identify the individual or individuals responsible and prosecute them.

As a hypothetical example, if a group of three people who worked for the same bank could be proven to have murdered a number of people, they would be arrested, charged, prosecuted and (if the trial went as the authorities hoped) would be convicted and likely to spend a large number of years in prison. There wouldn’t be a lengthy enquiry that saw the bank they worked for given a hefty financial penalty while the three bad guys were left free to keep committing the crimes. So why is that the case with money laundering?

Regardless of whether the new EU proposals are introduced, the question has to be asked: are the authorities genuinely bothered about bringing to book the people who facilitate money laundering? There is little doubt that the powers that be are keen to strip people of what they believe to be the proceeds of crime. In our experience they often seem misguided or overzealous in doing this. But how many people working in the financial services industries have been prosecuted for laundering money for those who have earned it through crime? Have there been any?

Tough talk about laundering may have some merit. After all, close cooperation between authorities must surely result in more effective detection of laundering. Yet detection hardly seems to be the answer. We already know that while one major money laundering operation is being uncovered the likelihood is that many, many more are functioning safe in the knowledge that they may never be detected. And those involved in the banking side of such operations can, it seems, continue to launder with impunity. Everything we know about laundering points to the fact that while the banks they work for may receive a costly slap on the wrists they themselves will escape prosecution.

So my argument is not that more measures to identify money laundering are unwelcome or unnecessary. It is that they are always going to be hugely ineffective as a deterrent if those who physically do the laundering are never prosecuted.

In the UK, we are seeing increased efforts by the authorities to take the assets of those who are believed to have obtained them from crime. Unexplained wealth orders are just the latest attempt to put anyone with suspect sources of wealth “on the spot’’. And that is an understandable strategy. But anyone with expensive houses, cars and a vast array of other costly assets bought with tainted money has only been able to do so because someone in a bank has helped launder that money. So would it not be more effective to go for them?

Efforts are constantly being made to respond to certain countries being awash with laundered money. But the priority seems to be taking that wealth from those who possess it while fining the banks involved. Would it not make more sense to go after the individuals in the banks who have enabled laundered cash to flood into countries? Maybe then the tap can be turned off and the flood of laundered money would become a trickle.

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